Memo's legality questioned

Dept. of Law to decide questions raised about gas pipeline negotiations

Posted: Tuesday, October 25, 2005

By MARK QUINERPeninsula Clarion

Gov. Frank Murkowski did read a memo from Alaska Department of Natural Re-sources Commissioner Tom Irwin questioning the legality of certain aspects of the Stranded Gas Act negotiations, according to his spokeswoman Becky Hultberg. But whether or not releasing the memo to the public was legal will have to be decided by the Alaska Department of Law, she said.

Murkowski released an internal memo written by Irwin to Alaska Attorney General David Marquez on Friday highlighting eight points where he thought the administration may be breaking the law while trying to cut a deal with the three North Slope producers, ConocoPhillips, ExxonMobil and BP. Irwin wrote that he wanted guidance from the attorney general on these matters.

Murkowski mentioned he was releasing the memo as an aside during a press conference Friday, saying there have been differences of opinion on the negotiations throughout the process.

Why did Murkowski release the memo?

"The governor took the issue very seriously and he felt like it was in the public's best interest to release it," Hultberg said in an interview Monday.

The Stranded Gas Act requires that negotiations are carried out in confidentiality. After a contract agreement is made between the state and the applicant, then it is released to the public for review and comment.

A contract has not yet been released for the public to review and details in the memo were previously unknown to the public.

When asked if Murkowski considered the legal ramifications of releasing the memo, Hultberg reiterated her response that the governor believed the public should see it.

Department of Law spoke-sman Mark Morones declined to comment on any questions regarding the memo.

When asked if the law was broken by releasing the memo he said, "That's part of what (the Department of Law) is looking at right now."

Morones said an answer to this question is expected later this week.

When the Clarion called the ADNR commissioner's office in Juneau on Monday morning seeking comment from Irwin, the response from the woman who answered the phone was Irwin was out of the office until Thursday.

When asked if he was out because of the memo's release, Dan Saddler, special assistant to the commissioner of the ADNR, said he did not know anything about Irwin being out of the office.

Hultberg declined to answer any questions about "Commissioner Irwin's status."

Saddler said the ADNR considered the memo to be covered by attorney-client privilege.

"DNR didn't leak this thing," he said.

In his memo, Irwin says the state's proposed contract could:

n Alter the taxes of existing oil infrastructure and production;

n Prevent the state from taking the producers to court or issuing administrative decisions if they breach the contract;

n Put the state at risk by receiving its royalties in gas, which would not necessarily advance the project;

n Ease the producers' obligation to develop Point Thomson's gas. Irwin's de-partment has been under ''substantial and continuing pressure'' to endorse those terms, he writes;

n Fix fiscal terms for 30 years and call for the state's financial support, which economic models show is unnecessary;

n Require the Legislature to change the law under which negotiations were held to conform to the contract;

n Not include evaluations of any other proposal, including competing applications from TransCanada and the Alaska Gasline Port Authority.

He also writes the negotiations being held under the Stranded Gas Act may be for gas that can't be considered stranded any more. Stranded gas is gas that is not marketed due to prevailing costs or price conditions as determined by an economic analysis by the state's revenue commissioner.

Economic models now show Point Thomson and Prudhoe Bay gas don't meet that definition, Irwin wrote.